Wealth Management & Trusts in Malta
Since Malta’s accession to the EU in 2004, Malta has emerged as an attractive jurisdiction for the establishment of international corporate holding structures, to be used in multinational groups, owner-managed companies as well as the holding of assets for High Net Worth Individuals.
FinanceMalta Investor Guide - Wealth Management
Worthy of note is the fact that in the last decade Maltese legislature has been very active in the area of fiduciary obligations, specifically those resulting from the creation of trusts and foundations.
A choice of trust jurisdiction will inevitably be the result of the careful consideration of a number of factors ranging from the regulatory framework, the expertise of service providers, costs and the judicial system. Since the inception of the concept of trusts way back in 1984, Malta has gone a long way in establishing itself as a trust jurisdiction worthy of serious consideration and has introduced new amendments to its trust law in 2014. The updated law brings Malta in line with international developments and, more importantly, saw the introduction of the Private Trust Company (PTC), which offers interesting opportunities to HNWIs and families who favour tailor-made trustees solutions.
What better way to show its commitment to the trust institute than introducing a comprehensive regulatory and legal framework for trusts and trustees as well as introducing the concept of trust in its Civil Code and making it available to the domestic market? Since the introduction of trusts to Maltese residents in 2004, the domestic trust industry and practice has grown considerably.
Maltese law caters for all the main types of trust normally found in traditional common law jurisdictions such as:
- Discretionary trusts
- Accumulation and maintenance trusts
- Fixed interest trusts
- Spendthrift trusts
- Charitable trusts
- Unit trusts
Malta is one of the few jurisdictions that cater for both trusts and foundations While trusts are peculiar to systems of law based on common law and are not generally found in civil law countries, Malta, a civil law country, is an exception to this rule.
The country hosts international top-tier firms as well as various boutique firms, both local and foreign, that assist with the establishment and administration of trusts and foundations in Malta. Protecting and enhancing the value of assets is increasingly important amidst the ongoing market volatility, and Malta trusts and foundations are an ideal financial instrument for those seeking solutions to their wealth management requirements.
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Continuation into and out of Malta
The Continuation of Companies Regulations issued under the Companies Act, 1995 provide existing trust companies with a particularly attractive incentive to apply to be registered as being continued in Malta, hence allowing a company to re-domicile without the need of dissolution in its jurisdiction of incorporation and be re-incorporated in the jurisdiction of choice (in this case, Malta).
Re-domiciliation allows continuation of legal personality from one jurisdiction to another, thereby eliminating the need to transfer all the trust business and trust assets to a new entity in the chosen jurisdiction. Conversely, a trust company set up in Malta can always have the option of continuing outside of Malta.
Setting up a Branch in Malta
A foreign trust company may wish to remain domiciled in its jurisdiction of incorporation but set up a branch in Malta. A company which has been issued with a license to act as trustee by the relevant regulatory authority in its home jurisdiction can obtain the necessary authorisation to operate in Malta in a very quick and straightforward manner by following a ‘fast-track’ system. The company must simply give notice in writing to the Malta Financial Services Authority (MFSA) of its intention to act as a trustee in Malta at least 45 days prior to commencing its activities in Malta and ensure it has received confirmation that the MFSA does not object thereto. A foreign licensed trustee may therefore take advantage of its regulatory status in its own jurisdiction to simplify and accelerate the process by setting up a branch, thereby also eliminating the cost and effort that would usually be required for a full application.
Establishing a Subsidiary in Malta
A company wishing to remain domiciled in its jurisdiction of incorporation may desire a stronger presence in Malta than a branch may offer, in which case the company may set up a subsidiary in Malta and apply to the MFSA for authorisation to act as a trustee.
Where the proper law of a trust is a foreign law, the Act provides that its validity, construction, effect and administration shall be governed by the foreign law concerned. The trust would thus be recognised and given effect to in Malta in accordance with The Hague Convention which has been ratified by Malta.
The Income Tax Act allows the taxability in Malta of a trust having a Maltese trustee. Furthermore, a Maltese trust can avail itself of the option of being treated as a company for income tax purposes, under the tax transparency model. Income attributable to a trust is not taxable in the hands of the trustee if it is distributed to the beneficiary.
The above is merely an indication of the advantages that Malta offers in the field of trusts. This serves to highlight the viability of the Maltese jurisdiction on various counts, be it as a base of operation for trustees (whether of foreign law or Maltese law trusts), or as a choice of trust law itself. Ultimately, the high standards resulting from the regulation of trusts and trustees reveal a great commitment by Malta towards the trust industry. Malta is a balanced jurisdiction, open to progress whilst ensuring standards are maintained.
Benefits of Trusts in Malta
Benefits of Wealth Management in Malta
- One of the few civil law jurisdictions that has developed its ow domestic trust law
- Recognitions of trusts set up under foreign laws
- Offering the set-up of domestic trusts and foundations
- Legislation published in English
- High professional standards with many accountants, bankers, lawyers, notaries and investment advisors holding overseas qualifications and having overseas experience
- Fast-track authorisation for trustees licensed in other (approved) jurisdictions
- English-speaking country with a pro-business government
- EU and eurozone location
- Multi-disciplined advisors able to adapt to the changing needs of High Net Worth Individuals (HNWIs)
- Sound and sophisticated banking system
- Fast-track authorisation for Professional Investor Funds (PIFs)
- Flexible investment structures (SICAVs, trusts, partnerships, etc.)
- A reputable stock exchange
- One of the only civil law jurisdictions to have successfully developed a trust concept by integrating it with Roman law sources
- Recognition of foreign trusts
- Offering the set-up of both trusts and foundations
- A stable macroeconomic environment